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from a small number of suppliers, principally Alcatel-Lucent, Cisco Systems, Comverse, Ericsson, Huawei andSiemens Netw<strong>or</strong>ks, although some of the equipment <strong>that</strong> we use is available from other suppliers. From time totime, we have experienced delays receiving equipment. Our business could be materially adversely affected if we<strong>are</strong> unable to obtain adequate supplies <strong>or</strong> equipment from our suppliers in a timely manner and on re<strong>as</strong>onable terms.Our business depends on providing customers with reliability, capacity and security. As telecommunicationsincre<strong>as</strong>es in technological capacity, it may become incre<strong>as</strong>ingly subject to computer viruses and other disruptions.We cannot be sure <strong>that</strong> our netw<strong>or</strong>k system will not be the target of a virus <strong>or</strong>, if it is, <strong>that</strong> we will be able to maintainthe integrity of the data of our c<strong>or</strong>p<strong>or</strong>ate customers <strong>or</strong> of <strong>that</strong> in individual handsets of our mobile subscribers <strong>or</strong> <strong>that</strong>a virus will not overload our netw<strong>or</strong>k, causing significant harm to our operations. In addition to computer viruses,the services we provide may be subject to disruptions resulting from numerous other fact<strong>or</strong>s, including human err<strong>or</strong>,security br<strong>each</strong>es, equipment defects, and natural dis<strong>as</strong>ters, which could have a material adverse effect on ourbusiness.Problems with our backbone, switches, controllers, fiber optic netw<strong>or</strong>k <strong>or</strong> netw<strong>or</strong>k nodes at one <strong>or</strong> m<strong>or</strong>e ofour b<strong>as</strong>e stations, whether <strong>or</strong> not within our control, could result in service interruptions <strong>or</strong> significant damage to ournetw<strong>or</strong>ks. All of our equipment f<strong>or</strong> provision of mobile services in Moscow is located primarily in two buildings inMoscow. Disruption to the operation of these buildings such <strong>as</strong> from electricity outages <strong>or</strong> damage to these buildingscould result in disruption of our mobile services in Moscow.We st<strong>or</strong>e our data center and fixed-line netw<strong>or</strong>k equipment at state-owned premises in Moscow pursuant toan agreement with the Russian auth<strong>or</strong>ities. The State Property Committee h<strong>as</strong> filed two lawsuits seeking to evict usfrom the premises, alleging <strong>that</strong> the le<strong>as</strong>e agreement w<strong>as</strong> entered into without the consent of the State PropertyCommittee. One of these lawsuits h<strong>as</strong> been dismissed, but may be appealed. Management believes <strong>that</strong> the risk of anadverse outcome of these lawsuits is probable. As a result of these lawsuits, we may lose our right to continueoccupying the premises, and this could result in netw<strong>or</strong>k disruption which could have a materially adverse affect onour business, financial condition and results of operations. F<strong>or</strong> m<strong>or</strong>e inf<strong>or</strong>mation on these lawsuits, see “OurCompany—Legal Proceedings—Other Proceedings.”Although we have back-up capacity f<strong>or</strong> our netw<strong>or</strong>k management operations and maintenance systems,automatic transfer to our back-up capacity is not seamless, and may cause netw<strong>or</strong>k service interruptions. In recentyears, we have experienced netw<strong>or</strong>k service interruptions, which occur from time to time during installations of newsoftw<strong>are</strong>. Interruptions of services could harm our business reputation and reduce the confidence of our subscribersand consequently impair our ability to obtain and retain subscribers and could lead to a violation of the terms of ourlicenses, <strong>each</strong> of which could materially adversely affect our business. We do not carry business interruptioninsurance to prevent against netw<strong>or</strong>k disruptions.Our ability to manage our business successfully is contingent upon our ability to implement sufficientoperational resources systems and processes to supp<strong>or</strong>t our rapid growth. We may face risks in connection with thec<strong>or</strong>rect use of the newly introduced systems and processes in the regions of Russia and the CIS <strong>or</strong> integrating newtechnologies into existing systems. F<strong>or</strong> example, if our billing system develops unexpected limitations <strong>or</strong> problems,subscriber bills may not be generated promptly and/<strong>or</strong> c<strong>or</strong>rectly. This could materially adversely impact ourbusiness since we would not be able to collect promptly on subscriber balances.Our operations in the CIS and the operations of Golden Telecom employ billing and managementinf<strong>or</strong>mation systems which may not provide our management with inf<strong>or</strong>mation <strong>that</strong> is sufficient in amount <strong>or</strong>accuracy. Golden Telecom is in the process of integrating its billing and management inf<strong>or</strong>mation systems, whichwill allow it to bill its customers and to manage other administrative t<strong>as</strong>ks through a unified system. If GoldenTelecom is unable to integrate and upgrade its billing and management inf<strong>or</strong>mation systems to supp<strong>or</strong>t its integratedoperations, its billing may be insufficient, which could have a material adverse effect on our revenues. Furtherm<strong>or</strong>e,Golden Telecom relies on agent billing and inf<strong>or</strong>mation systems to provide inf<strong>or</strong>mation necessary to generateinvoices in certain <strong>are</strong><strong>as</strong> of its operations. Golden Telecom may encounter risks <strong>as</strong>sociated with verification andcalculation of volumes of long-distance services provided to end users, invoicing and revenue recognition.Sale of handsets and other devices and our inability to maintain relationships with handset providers couldhave a negative impact on our Company.Hist<strong>or</strong>ically the v<strong>as</strong>t maj<strong>or</strong>ity of our revenue h<strong>as</strong> come from providing telecommunications services, withrelatively little of our revenue coming from sales of handsets and other devices. In 2008 we significantly incre<strong>as</strong>ed37

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